ResMed Inc. (RMD) - Breathe easy
November 5, 2024
ResMed Inc. develops, manufactures, distributes, and markets medical device and cloud-based software applications targeting the management of sleep apnoea. The company operates in two segments, Sleep and Respiratory Care, and Software as a Service.
The company delivered a strong September quarter result, with 11% revenue growth translating to 35% earnings per share growth. Revenues were 3% ahead of consensus due to higher rates of flow generator growth.
The gross margin of 59.2% aligned with expectations, while operating expenses were slightly ahead of forecasts.
Net operating cash flow increased by 14% compared to the previous corresponding period, despite higher inventory due to rebalancing sea versus air freight. Net debt fell, while the value of share buyback program was boosted.
ResMed upped it FY25 EPS guidance thanks to jump higher flow generator revenues. Revenue growth for the current quarter is forecast at 10%. We forecast the company will be able to generate annualised EPS growth of 13% for the next few years, which justifies its current trading multiples. We ticked our price target up from $39.25 to $40.05 following the quarterly.
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